Whittier Law School Photo via Wikipedia

Law schools are shutting down.

We should applaud the leaders who are addressing the problems of legal education. They are taking action, which could not have been easy.

Although the closure of Whittier Law School in Costa Mesa, California, is being interpreted negatively, it should be taken positively. The institution, which recently sold its real estate, will have a “teach out” plan for the remaining students. Despite the threat of litigation, it is likely that the place eventually will cease operations. 

The development would not surprise those following the argument about the value of the J.D. degree. It was only a matter of time.

Lawyers would appreciate from their training in rhetoric that the significance of the Whittier announcement depends on how the terms are defined. It is said to be the first law school to close in modern memory. That statement is true if “law school” is limited to those holding American Bar Association full accreditation.

There are other cases. One class graduated from Indiana Tech, boasting one alumnus who passed the bar exam in the state, before it said it was giving up. It had not yet acquired full ABA status. Rutgers combined its Camden and Newark campuses, relying on virtual reality technology to run seminars simultaneously at both sites. William Mitchell and Hamline in the Twin Cities merged, rolling out a provisionally approved on-line program.

But the real secret is hidden in the open. More significant in numerical terms than any single school disappearing, almost all law schools have downsized with varying degrees of enthusiasm. The cumulative loss of student headcount is equivalent to at least ten, perhaps more, law schools vanishing.

Even a bounce in the applicant pool will not magically resolve the basic problems. Those are no different than what newspapers, brick-and-mortar retail stores, and, for that matter, major law firms, have faced in a marketplace that is dynamic and increasingly rewards disruption.

The observations made about law schools might sound radical as predictions of disaster. They have become common to the point of cliche as applied to other business ventures in this environment. Law schools are not unique. They are enterprises constrained by economics.

Law schools have run into a set of related challenges. They make their money from the amount of tuition charged, multiplied by the enrollment, minus what they return through “tuition discounting,” by which some students subsidize other students, willingly or not. There are a few, the most prestigious, that have their own considerable endowments. Deans at the rest dream that a benefactor will contribute enough to solve everything, a higher education administrator’s version of a fantasy about winning the lottery, except few philanthropists yearn to alleviate a structural deficit.

The number of people who wish to come to law school, who also possess the conventional credentials of LSAT and undergraduate grade point average deemed to be acceptable by each school, is simply too low at this point. Schools have always had to compete with one another. But they now have to compete with the choice by their customers not to enroll at all.

So many schools are locked into desperate races to the bottom to bring in the class they desire. They have the dilemma of giving away even more “scholarships” (really funds transferred from another student paying the advertised price to another paying less, not provided by donors) to obtain coveted numbers versus having to cut their budgets to achieve balance. 

Many law schools embedded into a university reportedly are being subsidized. They can no longer sustain themselves. Various units of a university would not break even if they were spun off. What makes legal education different is that everyone assumed they would be fine. In good times, they could return a bit of “profit” to their parent. People comfortable supporting the English department, since Shakespeare is integral to our culture, balk at the notion that a law school deserves the same consideration.

The temptation is to blame the leaders of law schools that cannot continue. Yet those in charge at Whittier did what was right. They could have lingered miserably. That would damage the profession and be unfair to students whose prospects could not be described as great. Regulators have become strict about placement of recent graduates. They even audit law school employment claims.

Access to legal education is crucial, but it is meaningful only if the “return on investment” is favorable. Otherwise access slides into predatory lending. Would-be 1L students who are rational wonder with reason about the debt they are taking on.

The ongoing efforts to control spending on campuses prove to be extraordinarily difficult to implement. It is easy to see why. By and large law schools use their funds on personnel, primarily professors. As revenues head down, expenditures must come down on a dollar-for-dollar basis. That happens by lowering headcount or compensation, or raising workloads. 

As they say, though not usually in academe, the bottom line is the bottom line. Law schools cannot continue to do business as usual. Otherwise they will follow Whittier. We should thank those who are there who had the fortitude to do what had to be done.